The Great Tax Reap

UK tax

1 Oct

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As the Harvest Moon on 6 October rises, expats are facing a different kind of glow: the steady red creep of taxes and policy shifts heading into the late-autumn fiscal season. The UK’s Autumn Statement has been pushed toward late November, buying time for ministers to shape revenue plans - often via quiet rule tweaks that bite later. Here’s what that means for people living and working abroad.

Why “tax creep” happens (and how governments use it)

When government debt and borrowing costs are high, Treasuries reach for tools that don’t look like headline tax hikes:

Freeze thresholds rather than raise rates (bracket creep).
Index less (or not at all) so inflation does more of the work.
Expand tax bases (what counts as taxable) quietly over time.
Outsource delivery to cut visible state payroll while maintaining services.

Cyprus as a contrasting model: Much of healthcare is contracted to private providers. Patients book fast, tests and consults flow quickly, and the state pays outcomes rather than carrying permanent payroll bloat. It’s one example of reducing queues and cost growth without expanding headcount.

Markets, institutions, and a shifting global backdrop

Global institutions are showing their age. From the UN at 80 to EU regulatory overhangs, we’re seeing the push-pull between bureaucratic stability and entrepreneurial agility. The UK, post-Brexit, is courting investment with lighter-touch regulation in sectors like AI - creating opportunities for expats and firms willing to navigate new rules.

The Eastern Med watch: Cyprus, Turkey, and the Schengen question

Cyprus remains divided, Turkey is in NATO, and regional security ties are tightening. There is periodic talk about Cyprus advancing toward deeper Schengen integration if political conditions allow. Any breakthrough would be transformational for mobility and business planning in the region. For now, treat this as watchful speculation - not a plan you can bank on.

Why Cyprus still ranks for expat planning

For those who become Cyprus tax resident (and meet non-dom rules), the current framework remains attractive:

0% on dividends and bank interest (under non-dom rules).
No inheritance tax.
Capital gains tax applies mainly to Cyprus immovable property; most shares and foreign securities are outside scope.
Foreign pensions can be elected into a flat 5% regime over an annual allowance.

Result: a simple, predictable base for retirees, entrepreneurs and investors—provided residency, source rules, and treaty positions are set up correctly.

UK pensions: where “creep” can bite

A few realities expats need to model now:

Overseas Transfer Charge (25%) already hits many pension transfers to non-UK schemes for UK residents.
Policy makers can tighten mobility of pension tax rights without a splashy “tax rise” headline—e.g., by limiting where and how a fund can be taxed or inherited.
Recent shifts mean pensions can count more heavily for UK IHT exposure than before, changing estate math for higher-value pots.
For some expats, being non-UK resident and using treaty-aligned withdrawals (or recognised overseas arrangements) keeps lifetime tax lower but only if you get the sequence (residency → structure → drawdown) right.

Takeaway: If you hold significant UK pensions and are considering a move, sequence planning before the next fiscal package matters more than ever.

UK property: the direction of travel

You already feel it:

CGT on disposals (rates/allowances trimmed in recent years).
IHT pressure remains, with reliefs under constant review.
Local measures (e.g., higher charges on long-vacant homes) hint at a readiness to tax property “stock,” not just “flows.”

Scenario planning (not predictions): a future broad property levy replacing or reshaping council tax/stamp duty; tighter principal private residence reliefs; or revised IHT bands. None are certain—but they’re credible enough to warrant contingency plans.

Practical playbook for expats (and expats-to-be)

Residency first, money second. Nail your tax residency days, registrations, and treaty positions before moving assets or drawing pensions.
Pension sequencing. Map lump sums vs. staged drawdown under different jurisdictions; model a “5% election” where available.
Structure ownership. Where appropriate, use trusts or holding entities (in compliant jurisdictions) to manage probate exposure, cross-border CGT frictions, and future IHT.
Property strategy. Separate lifestyle homes from investment property; stress-test for CGT/IHT changes and local levies.
Liquidity & buffers. Keep multi-currency access, emergency documentation, and duplicate digital records (IDs, policies, POAs) for fast pivots.
Document everything. Immigration, tax files, banking KYC, source-of-funds proofs - orderly files are worth their weight in saved months.

Final word

The Harvest Moon is a reminder: winter (budgets) is coming. “Tax creep” is less about shock announcements and more about small pivots that lock in big future revenue. If you’re living or working abroad—or planning to—this is the time to tighten your structures, clarify your residency, and put your pensions and property on the most resilient footing.

Book a Free Review: If you want a confidential cross-border check-up on residency, pensions, property and estate planning, ProACT Partnership can walk you through options and sequencing for 2026 and beyond.